Difference Between a Store Credit Card and a Regular Credit Card

If you shop at any store that offers a credit card, you’re almost guaranteed to be asked to sign up for it. The offer to save 10-20% on that day's purchase is tempting, but store credit cards often aren’t worth it compared to regular, or general use, credit cards branded with a major processing network.

Limited Use

Store credit cards, unless they’re co-branded – can only be used in a specific store or family of stores.

If you get an American Eagle store credit card can only be used on purchases made at American Eagle. The exception is when a store credit card is co-branded with a Visa, MasterCard, or American Express logo. Most stores offers at least one co-branded credit card in addition to its store credit card, but the co-branded card typically has more stringent qualification criteria.

By comparison, general purpose credit cards, even co-branded store credit cards, can be used at any merchant that accepts credit cards from that processing network. They're just like any other credit card, but purchases made in the affiliated store will typically earn higher rewards or other benefits. You typically won’t run into any problems using a Visa or MasterCard.

Higher Interest Rates

Store credit cards often have higher interest rates than regular credit cards. Retail store credit cards have an average APR of 24.99 percent while general purpose credit cards have an average rate of 16.15%, according to a 2017 survey from CreditCards.com.

The higher interest rate means you’ll pay more interest when you carry a balance and it will take you longer to pay off your balance than if you had a credit card with a lower interest rate. Cobranded store credit cards tend to have slightly lower interest rates than those that aren’t cobranded, but even these rates are higher than for credit cards without a retail store affiliation.

Restrictions on Rewards

With store credit cards, rewards are relatively difficult to earn and have limited options for redemption. Most every store credit card only rewards you on purchases you make in that store – obviously since you can’t use the credit card anywhere else. Once you accumulate enough rewards for redemption – usually a gift certificate or coupon – you can only use it in store and sometimes you have to use your credit card to redeem the reward.

Cobranded store credit cards lets you earn rewards on all purchases and more on that stores purchases, but may still allow you to only use your rewards in that store.

Outside of store credit cards, rewards credit cards reward you with cashback in the form of a check or statement credit, points to use toward merchandise or a variety of gift certifications, or miles to offset travel expenses.

0% Interest vs Deferred Interest

Store credit cards don’t have APR perks like 0% interest free period. What you might find instead, particularly in stores that sell big-ticket items, is a deferred interest promotion. With deferred interest you must pay the balance before the promotion period ends to avoid being charged interest. Otherwise, if any of the balance remains, you’ll get hit with backdated interest for the entire promotional period.

With a true 0% interest rate promotion, you’ll only be charged interest on the balance that remains after the promotion period ends.

Credit Limits

Store credit cards usually have low credit limits, at least to start with. It’s not uncommon for cardholders to be approved for a $300 or $500 initial credit limit on a store credit card. A credit limit that low is easy to max out in a single day, especially if you've received a credit card from your favorite store. That’s not to say that you’ll automatically be approved for a higher credit limit with a general purpose credit card, but it’s just more likely than with a store credit card.

Impact To Your Credit History

Regular credit cards look better for your credit. Store credit cards are relatively easy to qualify, making them a good option for first time credit card users or people looking to rebuild their credit.

However, store credit cards only go so far to establish a good credit history. To reach a good credit score, you’ll eventually need to get a major credit card, even if it’s a cobranded version of a store credit card.

Store credit cards may be good for getting started with credit. Once you’ve established a good credit history, a general purpose credit card or a cobranded store credit card will be a better option.